Messing With Your Head: MSFT Costs World Economy $500 Billion

by on March 31, 2011 · 1 comment

The English language is public domain (the language itself, not everything said with it). So it’s worthless, right? No dollars change hands when people use it. Perhaps it could be made worth something if someone were to own it. The owner could charge a license fee to people who use English, making substantial revenue on this suddenly valuable language.

Congress can take works in the public domain and make intellectual property of them according to the Tenth Circuit Court of Appeals in a case that approved Congress “restoring” public domain works to copyrighted status. (The case is Golan v. Holder, and the Supreme Court has granted certiorari.)

But would we really be better off if the English language were given a dollar value through the mechanism of ownership and licensing? No. What is now a costless positive-externality machine would turn into a profit-center for one lucky owner. The society would not be better off, just that owner. If we had to pay for a language, we would regard that as a cost.

In a similar vein, Mike Masnick at TechDirt indulges the somewhat tongue-in-cheek observation that Microsoft costs the world economy $500 billion by accumulating to itself that would have gone to other things. It’s a sort of Broken Window fallacy for intellectual property: the idea that creating ownership of intellectual goods creates value. What is not seen when intellectual property is withheld from the public domain is the unpaid uses that might have been made of it.

Now, Microsoft has reaped wonderful benefits from its intellectual creations because it has bestowed wonderful benefits on societies across the globe. But might it have provided all these benefits for slightly less reward, leaving more money with consumers for their preferred uses?

This is all a way of challenging the mental habit of assuming that dollars are equal to value. In the area of intellectual property (whether or not protected by federal statutes), things that have no effect on the economy (because they’re in the public domain) may have huge value. Things privately owned because of intellectual property law may have less value than they should, even though their owners collect lots of money.

  • Fredmi

    I am afraid you are understating the case… The lunatic extension of copyright duration and patentable stuff is slowly but surely bringing the innovation machine to a painful slow death in America. Microsoft has zero incentive to actually innovate (and it hasn’t in decades, if ever), since it works more and more as a patent troll. Not to mention lesser players. Public domain means it’s available for people to build on, and, boy, did Disney feast on public domain material for its blockbuster creations. Of course, NOW, the stuff it created thanks to public domain is going to be locked up for centuries (or until the USA collapses) thanks to eternal copyright extensions. So, a new “Disney” will have a much harder time coming out. So much for “incentive to innovation” – hah!

Previous post:

Next post: